Wall Street sinks as political controversy frightens investors
Major equity indices in the United States recorded their biggest daily fall in nearly eight months on Wednesday as the political turmoil in the United States pushed the investors away from riskier assets. Furthermore, markets see the recent developments as major setbacks on proposed and eagerly awaited policy changes, such as the deregulations and the tax reform.
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“If he’s preoccupied defending himself and if it goes a lot further, then any hope of his legislative agenda coming to the fore is going to be reduced,” John Stopford, the London-based head of fixed-income at Investec Asset Management Ltd., said in an interview with Bloomberg TV, after the House Oversight and Government Reform Committee asked Comey to come in and testify on May 24.
After dropping to its lowest level since the 2007-2008 financial crises, the CBOE Vix Index, known as the fear gauge, rebounded sharply on Wednesday and recorded its biggest daily gain since the U.K. decided to leave the EU last summer.
The Dow Jones Industrial Average dropped 370.12 points, or 1.76%, to 20,609.63, the S&P 500 fell 43.35 points, or 1.81%, to 2,357.32 and the Nasdaq Composite lost 158.63 points, or 2.57%, to 6,011.24.
“What has been setting in over the course of the day is that political uncertainty is something that’s likely going to be with us for a significant amount of time,” Dennis Debusschere, Evercore ISI’s head of portfolio strategy and quant, told Bloomberg.
Headlines from the U.S. session:
- CME Group FedWatch's odds of June hike fell to 64.6%
- US yields: range trade for next three to six months, then higher - Danske Bank
- U.S. Senate Committee inquired WH to provide transcripts, memos and recordings of Trump-Obama conversations with Comey
- U.S. Senate Intelligence Committee requested James Comey to appear in both open and closed sessions
- What does this "Trump news" mean for US markets? - Nomura
- US Rep. Adam Schiff: Impeachment cannot be perceived as an effort to nullify the election by other means
- NY Fed: Household debt reaches new peak driven by gains in mortgage, auto, and student debt
- US Rep. Al Green: The President must be impeached
- US House Speaker Ryan: Need the facts on Comey & Russia reporting - LiveSquawk